Securities Industry

Prospectuses

A broker who takes orders from his clients to invest in a mutual fund is legally required to send them a prospectus. In almost all cases, the prospectus is a lengthy document (usually 30-40 pages, and sometimes longer). Since the prospectus is mailed to the client, an important consideration is the weight of the paper on which the prospectus is printed. Lightweight stock (typically 30# - 38# offset or 12# - 15# bond) is chosen because it can save an ounce or more of postage on each prospectus that goes out.

In the traditional fulfillment process, the prospectuses are pre-printed on an offset press in relatively large quantities and stored in a warehouse. When the broker makes a sale, the brokerage must pull a copy of the prospectus from inventory and mail it to the client. Independently, a confirmation of the order is generated and mailed under separate cover to the client. Some brokerages also generate a "thank you" letter, and mail that to the client in its own envelope. The three mail pieces arise because separate systems are used to produce the different documents.

The Xerox Composite Prospectus solution (described in the Automated Fulfillment Factory) combines all three elements into a single, seamless, print on demand solution. When a sale is made, the three documents are printed together on a high speed printer adapted by XSIS for Lightweight paper. The prospectus is printed on 13# bond; the confirmation of share price and quantity is printed on cover stock at the same time that a personalized "thank you" letter is printed on the front, and then the cover and prospectus are combined into a signature booklet. This approach eliminates at least one piece of mail (two if a letter typically is sent), saving first class postage on each piece, on every sale. And the composite document typically requires no more postage than the prospectus by itself.

Securities brokers may be able to cost-justify the Xerox solution on the postage savings alone. Plus, print-on-demand contributes additional savings: the warehouse is eliminated and there are no wasted prospectuses due to frequent updating of financial information.

The Composite Prospectus makes economic sense even if the securities brokage currently pulls the prospectus from inventory, pulls the sale confirmation off the printer, and stuffs them in a single envelope for mailing. With the Xerox solution, incorporating an XSIS printer, these firms will probably pay the same amount of postage as they pay today -- but they will still gain all of the print-on-demand related savings (from eliminating inventory, simplifying workflow, dramatically reducing labor, etc.). And the print-on-demand approach eliminates manual errors, while it speeds delivery time.

The Feed Assurance Feature (FAF) is critical to companies that print prospectuses for multiple mutual funds. FAF guarantees that each image is printed on the intended paper stock, so the prospectus body of Fund X is never printed on the letterhead for Fund Y. Without FAF, mix-up's of this sort almost inevitably occur.

The insurer who already prints on demand can save an enormous amount of postage by using an XSIS printer to produce the policy and endorsements on Lightweight Paper, instead of on 20# or 24# bond. Those insurers who currently print their policies on offset presses using lightweight paper do not have to trade off the efficiencies of printing on demand for lower mailing costs. The lightweight paper documents produced on XSIS adapted printers are comparable in look and feel to traditional offset printed policies, so the company can enjoy all of the benefits of switching to print-on-demand and continue to pay the lowest possible postage on every piece of mail.